Would you rather have a cow milking an average of 80 pounds or 70 pounds of milk per day?
This turns out to be a tricky question, one you can’t answer unless you are told what the composition of the milk is in each case.
Then, what if I tell you both cows are producing 2.80 and 2.32 pounds/day of fat and protein, respectively; which cow would you prefer?
Most people would choose the cow at 80 pounds/day.
Current situation
But let’s see what the current situation is using prevailing milk and feed prices in February 2009.
In the accompanying table, Federal Order prices for milk components in February ’09 were used. We also factored in a producer price differential (PPD) of $1.00/cwt, a quality bonus of $0.20/cwt, and a hauling, cooperative, and marketing cost of $1.15/cwt.
Many dairy producers have not realized the “other solids” in milk (mostly lactose and minerals) are now negatively priced and have been so for five months.
In addition, it costs something to produce these other solids.
In February ’09, feed costs to produce a pound of other solids were close to 17 cents. With the exception of 2007 and two months in 2006, other solids have always been priced under 17 cents/pound.
The cost of producing these other solids almost always exceeds what producers are paid for them. Other solids are a very constant component of milk, averaging 5.7 percent in cattle milk.
Thus, any increase in milk volume is accompanied by an increase in other solids yield for which dairy producers lose money on.
Make money
In essence, dairy producers make their money on the fat and protein produced, around 7 pounds per hundredweight of milk in Holstein cows and lose money producing the remaining 93 pounds.
Those who understand this reality will focus on producing the maximum amounts of fat and protein in the smallest volume possible.
